CFPB may repeal payday lender rules

The Consumer Financial Protection Bureau has decided to reconsider a key set of rules enacted last year that would have protected consumers against harmful payday lenders.

The bureau, which came under control of the Trump administration late last year, said in a statement Tuesday that it plans to take a second look at the payday lending rules. Although the bureau did not submit a proposal to repeal the rules outright, the statement opens the door for the bureau to start the process of revising or even repealing the regulations.

The bureau also said it would grant waivers to companies as the first sets of regulations go into effect this year.

The cornerstone of the rules enacted last year would have been that lenders must determine, before giving a loan, whether the borrower can afford to repay it in full with interest within 30 days. The rules would have also capped the number of loans a person could take out in a certain period of time.

If allowed to go into effect, the rules would have had a substantial negative effect on the payday lending industry, where annual interest rates on loans can exceed 300%.

The industry derives most of its profit from repeat borrowers: those who take out a loan but struggle to repay it in full and repeatedly renew the loan. When the bureau finalized its rules last year, it estimated that loan volume in the payday lending industry could fall by roughly twothirds. The industry, which operates more than 16,000 outlets in 35 states, probably would see thousands of those stores close.

Most of the rules would not have gone into effect until August 2019.

Since Richard Cordray, appointed by President Obama, stepped down as director in November, the Trump administration has moved to clamp down on the bureau’s activities. The bureau is now under the control of Mick Mulvaney, the White House’s budget director.